Business Law

The Girl Scouts of the United States (GSUSA) is led by the National Council. Local councils are governed by their own independent board of directors and employ their own officers and professional staff and are responsible for their own financial health. For a nominal fee, GSUSA issues a charter to the local council, which grants to that council “the right to develop, manage, and maintain Girl Scouting throughout the areas of its jurisdiction, including the right to use GSUSA’s names and protected marks.” Each local council has exclusive territory demarcated in its charter. The councils are not subsidiaries of GSUSA, rather the national organization relates to the councils as franchisor to franchisee. It authorizes the local councils to sell cookies and other merchandise under the “Girl Scout” trademark, which it owns. Manitou Council, a local council, makes most of its money from the sale of Girl Scout cookies and generates other income from charitable donations, fees from Girl Scout camps it owns, and investments. The GSUSA, in an effort to attract more members from minority groups and to increase revenue, sought to dissolve Manitou’s territory as part of a realignment of council boundaries. Manitou sued to enjoin GSUSA from taking away its territory, which would not put it out of business, but would preclude it from representing itself as a Girl Scouts organization or otherwise using Girl Scout trademarks. Manitou Council claimed that GSUSA violated the Wisconsin Fair Dealership Law (WFDL) because it did not show good cause for termination as the law required. GSUSA defended by stating that Manitou is not a “dealer” (franchise) protected by the statute. The WFDL defines a dealership agreement as one in which the grantee is authorized to use the grantor’s trademark and creates “a community of interest” between the parties “in the business of offering, selling or distributing goods or services.”

Do you think that Manitou Council has the characteristics of a franchise? Should it be protected by the WFDL?

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Does it matter that the GSUSA and the local councils are nonprofit enterprises? [ Girl Scouts of Manitou v. GSUSA, 549 F.3d 1079 (7th Cir.)]

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